Man Lets House Go Into Foreclosure Over $25 Fee

UPDATE: It seems our reader may have the last laugh, letting the house go into foreclosure, then buying it back at a discount.

The long and short of this story is that one of our readers was charged an erroneous $25 fee from his bank, so until they fixed it, he wasn’t going to pay his mortgage. They never fixed it, and now his house is going into foreclosure.

I got a Home Equity Line of Credit (HELOC) in 2006 from Citizens Bank. In 2008 I had to file for personal bankruptcy because my business was forced to close and I had several personally guaranteed business loans. When notified of the bankruptcy, Citizens Bank canceled the draw period on my HELOC – which they certainly had every right to do.

In August 2008 they charged me a $25 annual fee, which the loan documents describe as a fee that occurs during the draw period – they one they canceled. I calmly phoned Citizens Bank to inform them that this fee was now erroneous. The woman who took my call told me (and this is unbelievable for a $25 charge) that she could not tell me whether it would be waived and that I would have to call back later in the week. Customer service was pretty sub-par to start off. I asked the woman if they could call me, and she said no. I asked if they could send me a letter in the mail. She said they would do that and I would have it within 10 days. I never received the letter.

I phoned back 3 weeks later and reiterated the request to waive the fee. This time the woman flatly told me “no”. I explained that since the fee was erroneous as spelled out in the loan documents, it MUST be waived or they would be breaching the agreement. She refused to budge. Again, this is over a $25 charge.

I then sent letters to both the address on my loan documents and their corporate address, which happens to be 5 miles from where I live. I pointed out that the fee should be waived and why. I even copied and highlighted the section in their agreement and included it. I received no response to either letter.

At this point, I needed to get their attention. I wrote another letter, this time indicating that they were in breach of the agreement and I would halt monthly payments ($200/mo) until they waived the fee. Additionally, I said I would not pay any late charges accrued during this time as this problem is entirely Citizens Bank’s responsibility. I received no response from the letter. I stopped making payments in hopes someone might notice, figure out why, and correct the problem so we could all move on with our lives.

Six months later, I received a polite letter from their attorney indicating I was in default and the amount in back payment that was owed. I replied and explained what I told Citizens Bank. I received no further correspondence from that attorney.

Four months after that I received a packet from Citizens Bank telling me that they understand I am having financial difficulties and trouble paying the loan and offered me some loan modification programs. I replied indicating I had no financial difficulty, that this was a customer service issue, and that as soon as they waived the $25 fee and late charges ($10/mo), I would make all back payments immediately and resume monthly payments. I received no reply. I could have been a jerk and took full advantage of their modification program, but I honest and expected them to act likewise.

Four months later, I received a letter from a different attorney with the same story about me being in default and now included $400 in attorneys fees on top of the missed payments and late charges. To this point, there was absolutely no acknowledgment of the issue I presented to them. I replied to the attorney just as I had to the other attorney, again indicating I was not asking for much here and this should be a no-brainer. I actually received a reply! The reply, which I got 2 months later, said “they will waive the $25 service charge and one month late charge but no other fees”. I was flabbergasted – what a half-ass approach to good customer relations! As I was very clear in my prior letter that ALL late charges would need to be waived, I continued to suspend payments.

Two months ago I received a letter from a new attorney, written as if this was the first attorney to contact me on this matter. I wrote this attorney back indicating that the problem stems entirely from Citizens Bank’s error and that all missed payments would be brought current immediately upon waiver of all late charges and attorneys fees. My letter was ignored.

Last month I received a new letter from that attorney group, with no acknowledgment of my response, indicating simply that a foreclosure sale was scheduled for December 15, 2010 and included a copy of the ad that will run in the newspaper. Now Citizens Bank was resorting to bully tactics!

In summary, Citizens Bank is now foreclosing on my home because they have absolutely no interest in doing the right thing and correcting their mistake. They are using the fact that foreclosure in my state does not require a judge to bully me into paying them whatever they say and if I do not, they will kick me out of my house at Christmas time.

I appreciate the spirit of your epic stand, but better use all that mortgage payment you’ve been saving up to get a lawyer if you want to have any hope of saving your house.

UPDATE: Our reader wrote back. He’s got a plan to still come out ahead.

Hiring a lawyer would have cost more than $25. Filing a suit in small claims court would have cost more than $25. In summary, any type of action would have cost more than the fee I was disputing. Too many times in this day and age companies like Citizens Bank charge fees they know they can get away with because the cost of disputing it is greater than the fee. That is the point here.

I am not going to literally let them kick me out of my house, obviously. The option to pay is still on the table, but it isn’t right. Believe it or not, I was advised by my attorney to allow the foreclosure to occur, and bid on it myself. Worst case is it becomes an REO and I buy it back from the realtor at a discount.

Comments

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So, he stopped making payments over $25? And at no point bothered to bring a lawyer of his own in to deal with the situation? And realizes that the bank can act without the courts being involved in his state?

the bank applies your payments the way they see fit. they would have used the first $25 to pay the fee then the balance to pay a portion of his monthly payment…leaving him $25 short on the payment and the same result in the end. I think what most people are saying is “bend over and take it from the corporate overlords”.

This. THIS. We expect to treat companies exactly the way we dont want to be treated, and we not only want the result we expect, but we want to write websites and be regarded as consumerist crusaders at the same time. The OP is not a crusader, he is foolish.

He’s half in the right. The bank may be in breach but that’s for a court to determine. If he didn’t want to involve the courts of a breach of contract, than he needs to accept some responsibility. Stating “you are in breach, here is what is required to set things right” generally requires a judge’s signature somewhere.

He should have just continued paying without paying the $25 fee during this time. Poor bastard has nobody to blame but himself. Hopefully cooler heads prevail, but my guess is the only way he can save his house is to hire an attorney and pay everything past due.

Sometimes you have to put your principles away and suck it up. No it isn’t right that the bank is resorting to these tactics, but they are in their legal right to do so.

Because one side breaches does not give you the unilateral right to determine the penalty for that breach. This is the same tactic as saying the bank made a mistake on my account, so I walked in and took the amount out of the tellers hands. It is plain STUPID. He will now lose his house since his part of the contract also spells out his remedies AND I will guarantee this amateur attorney will end up looking like a fool in court if he tries to go forward, Way to lose the house moron.

One would think his HELOC had a balance from which he walked away in the bankruptcy, but this is not specifically indicated. All we know from the information here is that the bank revoked his draw rights, and we don’t know specifically whether he walked away from any HELOC debt.

Nitpicking perhaps, but nitpicking is what contract law is all about. If the bank wanted contractual enforcement indefinitely of the annual fee, it should have drafted a better contract. I’d be inclined to pay the fee, file in small claims, and see what the judge thinks. (Which would make me really foolish if I lost, but not facing foreclosure.) On second thought, I’d pay the fee and consult (friends, forums) lawyers for advice.

Another question:

Did the bank intend to charge the $25 fee annually for as long as the homeowner owned the home? How would someone get this (apparently recurring) fee dropped – short of foreclosure? Do homeowners need the foresight to ask this question at the beginning before they even apply for a HELOC? Who would imagine this sort of thing happening if they didn’t see or read about it?

Make the cut? More like his picture would be on the cover of the book! That, or his bust would be the statuette! What was he thinking?! For $25, I’d say get over it, deduct it from the payment, and dispute from there. If OP is trying to be a hero here, he’s picked the wrong battle.

Not even that. Priorities. This guy has completely screwed up priorities. He should see mental health specialist. I’d rather fork out 25$ and contest it later, than stubbornly lose a house over such a small amount.

Did he think telling low level employee : ”fix it or I’m not paying” would work? Seriously?

Exactly what I would have done. If you pay a fee and lose the dispute, you’re out the fee. If you don’t pay and lose, you’re out the fee + late fees. He probably thought that, by not paying the $25, he had more leverage in the dispute. The problem was that the bank had much greater leverage – his house.

I wonder if he bothered to get delivery confirmations on any of these letters he sent. If so, a lawyer should be able to make a valid case to have the fee, and associated late charges – legal charges etc all to be eradicated.

However he may still be on the hook for interest that has accumulated on the debt while he withheld payments.

Not exactly the best way to handle the situation. Just because Citizens Bank was in breach of contract does not give him the right to also be in breach of contract as that is eliminating his defense. As it stands he was doing to them the very thing he was complaining that they were doing to him.

This man clearly did not think this all the way through. Violating one contract due to a violation on a different contract doesn’t make much sense, even if the contracts are with the same people. What he SHOULD have done is to not pay the debt in dispute ($25) and continue to pay the undisputed amount (his mortgage). Let them send you to collections, esp if you have the contract on your side, they can’t prove that you owe it.

Naw, you need to commit a few murders and bury the people below the house. Who wants to buy a plot of land where a crazy guy murdered people, buried them, then burned to the ground? That’s some bad juju. Definitely not getting $25 for that piece of land.

I can’t 100% say that this is the case because obviously I can’t see the documents, but with the HELOC’s that I used to write, the term “draw period” was defined within the recorded HELOC deed of trust to refer to the first ten years that the account was open- NOT to the individual’s actual ability to make additional advances on the account.

Assuming the wording to be similar, I would guess that the document in question defines the “draw period” in a similar way, or at least in a way not tied to the ability to draw.

When you think about it, saying something your “Your draw period is the period in which you are allowed to advance funds from your line of credit.” is a “how long is a piece of string” statement.

So, my guess is that the term “draw period” was legally defined, and thus, even if it sounds like it should mean something different in the context where his draw should be limited, means that the bank is within the terms of the agreement.

It seems obvious that a guy willing to foreclose on his house has either not obtained (or has not listed to) legal advice that would help him figure out whether he has a leg to stand on by saying they are in breach.

Um, I’m pretty sure whatever his loan contract said, it did NOT mention he had the right to stop paying his mortgage over the erroneous fee levied against a HELOC. They should waive the $20 fee and the late fees for not paying that fee. But he should be responsible for their costs for attempting to foreclose after he stopped paying on the loan.

I actally wonder if you RTFA. If you had, you would have noticed that the dispute with the fee is actually kind of irrelevant, given that he made a truly amazing and stupid decision to disregard his mortgage payments over a small fee on ANOTHER account. Given this, every commenter here is right. This guy was a fool.

charging an erroneous fee does not void a contract. it activates the “dispute resolution” clause that exists in every contract i’ve ever seen. his rights are spelled out under that section & i can pretty much guarantee that it doesn’t say “you can stop paying your mortgage until we resolve errors.”

I hope that the OP (whom I DO blame at least partially, let’s be clear) is underwater in the mortgage he’s prepared to sacrifice over ~$300 (the original $25 plus monthly late fees since late ’08.)

Initially, before he stopped paying, I’d say he was 100% in the right. Clearly discontinuing the scheduled payment over the $25 was not the right move. I didn’t see any statement that any of the correspondence was sent via certified mail, so it’s not clear that the OP can even prove he sent his various threats and ultimatums. I don’t know what incantation would have gotten their attention via certified mail, but it’s apparent that stopping payment of the amount it DID owe in protest over the tiny amount he did NOT was not productive.

While I agree with the OP in principle (the company should not have ignored, or more likely, lost or mishandled, his written attempts at a resolution to the problem) he really has only hurt himself in the long run here.

If you have an issue with something like a fee, you still make all payments – just don’t pay the fee.

I really like that still after 10 months (I think), he writes “…but I honest and expected them to act likewise.” REALLY? After 10 months of not getting them to understand your “point”, you still think they are going to?

Anyway, if you think a company is in breach of a contract – you don’t yourself breach another contract to try to make a “point” – you fight the first breach, and if needed – small claims court.

My final word: The bank was in breach of the first contract, and should remove the $25 fee. The customer was in breach of the second (home) contract, and should pay all late fees & attorney fees and back payments… or lose the house.

But see, here’s the heart of the matter. Are you absolutely sure every person who contacts you does so because they just don’t “like” it? Are you absolutely sure your computer system, paperwork, etc., are absolutely perfect, without error?

I have had to battle companies who overcharged me for months, simply because someone at a lower level refused to investigate, bumped it to someone else, etc. I got collection letters from a hospital who never credited over $1000 I’d paid them, completely clearing my bill. This even after my bank provided proof of the payment and that it had cleared. So many people passed the buck or treated me like I was a criminal, I ended up contacting the CEO in order to get the issue resolved.

If, every time you have a problem with a company, you have to fight, you might end up taking a stand in situations where right is maybe *not* on your side. However, companies with poor customer service and bad training for CSRs create this kind of monster in the first place.

I’m not saying what this guy did was smart or right, but why does everyone keep talking about 2 different contracts? It’s pretty clear from the narrative that he stopped paying the HELOC on which he was charged the fee, so that would be a single contract.

They assume that because the consumerist’s intro says that he stopped paying his mortgage. If there’s confusion, if it was his HELOC that he stopped paying, then the consumerist screwed up. The readers are just going by what they read.

If this bank just owns the line of credit and not the mortgage they’ll be the one’s responsible for paying off that mortgage. If they sell the house they get their cut after the mortgage company gets theirs if there’s any to be had. Not good business sense on their part either.

I cant begin to put into words how amazed I am at the level of stupidity in this situation. Not making a payment for almost TEN months over a 25 dollar fee?? Truly amazing. And this is not an epic stand. Its a moronic reaction to a relatively simple situation. WOW.

Standing your ground is one thing, but sometimes you just have to pick your battles. Right or wrong, some things just aren’t worth it. Does he honestly think a judge is going to say “Gee, he didn’t make his payments for months, and even admitted that it wasn’t due to financial hardship, but you *did* charge him that $25 fee and not reverse it, so stop picking on the owner”? These aren’t “bully tactics”, the bank is exercising its right to take the home which isn’t being paid for. They offered to refund the $25 fee, some of the late fees, and set up a repayment plan – they’ve gone out of their way to prevent foreclosure. Digging his heels in over a few late fees being excluded from the bank’s offer is just foolish and reckless at this point. This isn’t a game of chicken or a staring contest, hoping the bank will blink first. The bank isn’t bullying or bluffing & this isn’t going to end well – he “got their attention” and they’ll get his house.

“As I was very clear in my prior letter that ALL late charges would need to be waived, I continued to suspend payments.”

Unfortunately, we don’t get to choose how we get to “punish” the bank for fee mistakes or set our own loan repayment terms (beyond those stipulated in the contract). Risking a house over a $25 fee is a very high stakes game that the bank will win. What’s more important: Feeling like you’ve won (over a relatively minor issue) or keeping your home?

I think the smart thing to do would have been to make all the necessary payments and just NOT paid the $25 fee and all late charges… At least this way he could have KEPT his home AND continued to dispute the fees with proof that he made a reasonable effort to get their attention.

wow dude. NOT smart. not smart at all. send your mortage payment in as a box of un rolled pennies would be the way. heck send them fake poop in the mail. dont stop paying your mortgage for 2 years of $25.

The bank was probably in the wrong for charging the fee, but it’s pretty well overshadowed by the OP’s epic fail. As soon as it became apparent that resolving this over the phone wasn’t possible, he should have gone to the closest branch (with a copy of his HELOC contract), and talked to a person in their mortgage department. They probably could have cleared it up immediately. Instead, he decided to write a bunch of long-winded letters to attorneys that were probably never read, all the while the late fees continued to pile up.

Even if a face-to-face visit couldn’t have resolved things immediately, he always could have paid the fee and gotten it back later by some other means (executive e-mail carpet bomb, small claims court, etc.) He’s going to have a damn hard time getting all the late fees back now.

I always wonder why people will try to do stuff like this over the phone/through letters if they have the option of taking all of their papers down to the bank and taking care of this in person. Especially for something as important as your home, for crying out loud.

I used to work for a mortgage company in customer service. I heard people threaten to do this for a host of reasons. None of them made any sense, and as a good rep, I’d always convince them this was a monumentally stupid idea.

People seem to think HELOC is not a mortgage, IT IS. The money he drew from it previously is what he is being charged for, and what he has stopped paying. There are not two contracts involved. I suggest mr Amateur lawyer gets a clue. or one who actually passed the bar. You can not unilaterally decide the remedy for a breach of contract. A minor breach does not constitute VOIDING of the contract. Read the documant again and search under remedies. I am glad they foreclosed. I hope he loses his house and every other assrt he ever had. He is a major tool

This is clearly a case of double standards.
Ignoring the ramifications of his actions, he’s right in principle.
If corporations want the same rights as people, they need to expect to be treated the same.
They need to be held responsible for their actions and if they’re going to act like dicks, then they should be held accountable for their actions. You can’t roll over and let groups like this steam roll you because they have power. They’re wrong, he wants them to rectify the situation, but they won’t. He said he’d pay them what’s due when they stopped treating him poorly, but they continued to abuse their power; it’s a different issue when he fails to pay after they fix their error and apologize for the issues they’ve caused.

If, for some reason, he really felt it necessary to use his mortgage payments to battle it out with them over this $25 fee… shouldn’t he have just sent a $175 payment for one month, and then kept sending $200/month after that?

Why is it okay for them to do whatever they want and leave it up to him to suffer the consequences for whatever course of action he takes to get their mistake rectified? Especially when he has held nothing out that they couldn’t get back upon rectifying their mistake.

1. It’s the same company, different account or not, the money all goes to the same place.
2. Doesn’t matter if they thought he was an idiot, they were wrong and made no effort to cooperate or come to an amicable solution with him long before his mortgage came into question. Why should he continue to cooperate with them in any way?

He signed a contract that he would pay them money. It also said there would be a $25 annual fee as long as the account stayed open. When they closed the line and still charged him the fee THEY violated the contract. His stance was he wouldn’t honor his end of the contract until they honored theirs!

I am sure I would have kept paying the rest of it and disputing the fee. But I’m glad someone will stand there ground when the banks act like this.

Before I read the update I had wondered if that very outcome would be possible. Sounds like the OP is coming out way ahead. He has a 2 year old bankruptcy, a foreclosure isn’t going to beat his credit up too much more.

“Believe it or not, I was advised by my attorney to allow the foreclosure to occur, and bid on it myself. Worst case is it becomes an REO and I buy it back from the realtor at a discount.”

Worst case is that someone else buys it. However, you’d have to show proof at the sale that you have a loan or cash to cover the price of the bid. I think you’ll have a hard time securing a loan with both a bankruptcy and a year’s worth of delinquent payments under your belt.

” Believe it or not, I was advised by my attorney to allow the foreclosure to occur, and bid on it myself. Worst case is it becomes an REO and I buy it back from the realtor at a discount.”

Where did he get his attorney, out of a cereal box?

So, there’s a huge amount of missing information here, but let’s assume that his house is worth more than the combined balance of his mortgage and HELOC. Say the house is worth $200k and the total loans are $100k.

The bank forecloses, and puts the house up for sale. To buy it back, he’ll have to pay $200k, and he’ll have to fund it with cash, since there’s no way with a recent foreclosure and a 2008 bankruptcy, he’s going to qualify for a mortgage.

So, assume he’s got $200k lying around (if so, why was he in bankruptcy?), and he buys the house back. He’ll be out $200k (plus purchase costs), and the bank will pay him $200k (the sale price) minus $100k (the loan balance) minus fees (could be $10k or more), so figure $90k. Net/net, he’s out $110k. Previously, he had $200k in cash and $100k in home equity. Now he has $90k in cash, and $200k in home equity, he’s down $10k (the foreclosure costs).

If, of course, he’s underwater on the house (worth $150k, he owes $200k), then this could be a simple strategic default, where he hopes to buy it back for $150k, and, instead of being $50k underwater, be even. Of course, this again assumes he HAS $150k to buy it.

The correct way to go about this is to pay the mortgage, but not the $25 they want (or any interest on it). Thus they cannot foreclose and will instead go to court to attempt recovery of the $25 (+interest) in question. Once in court, they will lose and you’re still good for the mortgage.

Wow, what a bunch of passive ass-hats here. I say “Way to go, OP!” The reason that these sh*thole banks can continue to push around their customers over BS fees is because no one will do precisely what you have done, call them to the carpet. Your level of bravery (what everyone else here is incorrectly referring to as stupidity) should be commended, not down-played. Whether I, or anyone else here, would have the level of strength that you have had facing down impending foreclosure in this game of chicken is one thing, but you certainly don’t deserve the crap these comments are handing out to you. Thanks for fighting the fight, and I hope you prevail, either through Citizens Bank acknowledging their mistake and waiving all the extra fees, or through getting your house back at a discount.

“Choose your battles” is about individual choices, and you don’t know what battles he’s forgone already. In other words, this may be the battle he chose. He’s weighed his risk, he’s weighed his options, and he’s fighting the battle. His option to come and share his battle with Consumerist wasn’t, I’m sure, to garnish the sites hatred because it’s not what *you* or many others would have done (certainly not the way I would have fought it either) and it’s discouraging to see the backlash the OP is getting for fighting a fight against a problem that we all agree is a problem.

If he plays chicken with the bank and loses, then he has no one to blame, and I don’t see anything stating that he feels any differently. Until then, what’s wrong with showing a little support? You’d certainly want it if you chose a battle that others thought was stupid.

“”Choose your battles” is about individual choices, and you don’t know what battles he’s forgone already.”

Neither do you.

“His option to come and share his battle with Consumerist wasn’t, I’m sure, to garnish the sites hatred because it’s not what *you* or many others would have done …”

The opinion of those commenting on this article is not necessarily influence by his intent for submitting the story.

“… it’s discouraging to see the backlash the OP is getting for fighting a fight against a problem that we all agree is a problem.”

More like, it’s discouraging to you to see that not everyone agrees with your opinion. I think the comments have made it clear that most folks here would agree the $25 fee is a problem, but that losing your house is a bigger and more important problem.

“If he plays chicken with the bank and loses, then he has no one to blame, and I don’t see anything stating that he feels any differently. Until then, what’s wrong with showing a little support?”

I’m under no obligation to feel sorry for this guy or to shape my opinion of him based on feeling sorry for him. So what’s wrong with showing support? Nothing, unless that’s not your opinion.

“You’d certainly want it if you chose a battle that others thought was stupid.”

We’re not belittling what he’s trying to do. Banks are big enough and pushy enough as it is.

It’s the completely moronic way he’s going about it that makes everyone want to tear into him. Foreclosing on his house and then buying back at a discount still means the bank walks away with more money than he does, regardless.

There are many ways to “stick it to the man” without the risk of losing your house and destroying your credit (that was likely already questionable with a bankrupcy). When I purchased my current home, the builder dropped several balls at the last minute that left me unable to move in to my new home for a week, and without an apartment, and no place to store my belongings. I was left with no choice but to put all of my belongings into storage and live in a hotel for a week. Even after I was able to move in, they failed to complete several tasks making it impossible for me to cook dinner, so I did the first rational thing that came to mind, I sent them a detailed invoice for all of my out of pocket expenses that were as a direct result of their dropping the ball. I expensed them for rental of a second moving van, storage of my belongings, 3 meals every day for a week, hotel, cleaning expenses, and the cost and labor to personally fix what they did not finish so I could get on with my life and start using my home. Several weeks later I received a check for the full amount.

Several years later, I had a delivery person damage my wall due to their carelessness. They were giving me the runaround, saying they had to have their insurance adjustor come out and look at it, but the adjustor would never show up when promised, so I documented the damage, made the repair myself and sent them an invoice with an explanation of what the charge was for. A few weeks later, I had a check compensating me for the damage.

The point being, if normal complaint channels don’t work, try a back door approach by sending an invoice to their accounting department. They have the processes and procedures in place to track the issue and no accountant likes an unpaid invoice, so they will take the complaint up the chain of command and resolve the issue.

I don’t think he’ll be buying the house back, especially if the price is lowered…don’t forget, he now owes the bank the original principle, plus interest and penalties and foreclosure costs, minus whatever they recover from seizing it. They’re not going to sell him a house until he can pay back that huge debt (which is now unsecured). Even if they waive the debt, it’s reported as income and he’s probably going to have a 5-digit tax bill in his future.

Commenting on the update: He’s not going to “let” the bank take his house? They are gonna take it. And the minimum bid in a foreclosure auction is usually the outstanding amount on his mortgage(s). And his credit is STILL going to be destroyed.

And you can recover costs in small claims. So yes, it would have cost more than $25 up front, but he would have gotten it back when/if he won.

It isn’t right that they expect you to pay back the money they loaned you? Paying back a loan shouldn’t be seen as an “option”, it’s something you’re contractually obligated to so. They give you money, you agree to pay it back and you don’t. That puts the you in the wrong, irregardless of whether they wronged you first on a different issue or not.

“Believe it or not, I was advised by my attorney to allow the foreclosure to occur, and bid on it myself. Worst case is it becomes an REO and I buy it back from the realtor at a discount.”

1) Get a new attorney. Anyone that guarantees that you’ll be able to get the house back if it goes into foreclosure is either woefully misinformed or straight up lying.

2) No, the worst case scenario is still that you would lose your house. They call it bidding and not selling for a reason – other people can bid on it as well and, if someone bids $1 less than you, they get your house. I remember a Consumerist story a few months back about someone who was in foreclosure and wasn’t being allowed to catch up on the payments at that point. They were told to just let it go through the foreclosure process and then they’d be able to bid on it afterward. IIRC, when he tried to bid on it, he was told that it had already been sold before it got to the bidding process. Probably an inside deal, but the point is that he lost his house.

Even if he does manage to keep the house somehow, it doesn’t make him the hero he thinks he is. This isn’t the little guy standing up to the man, it’s just bullheaded, cut-off-your-nose-to-spite-your-face stupid to risk losing your house over $25. Even if he “wins”, it’s still foolish and wrong to not make the loan payments and risk the house over a minor issue.

As a credit minded banker, let me point something out. Bank examiners and short sell, foreclosure, and OREO (not REO) regulations would not allow the bank to sell this property back to the original owner or anyone who could be connected to the original owner. This is done to prevent this type of FRAUD from happening.

Enjoy suing your attorney for malpractice.

Also, if you have not paid your mortgage for all this time, the option to pay is no longer on the table. Once the loan is in foreclosure, the bank has already taken a write down for the loss. There is little incentive for the bank to do anything but take back the propert as Other Real Estate Owned and sell it fast. The remaining balance (principal, interest, fees, and big legal fees) will be given a summary judgement and garnishment against your future earnings. Since you have already declared BK, you may have trouble refiling.